Kohl's Drives Bottom Line to 16.5 Percent Increase

MENOMONEE FALLS, Wis.-Controls over expenses and inventories helped fuel Kohl's to a healthy 16.5 percent increase in net income for its fiscal second quarter, to $303 million.

According to Kevin Mansell, chairman, president and CEO, "prudent expense management" kept selling, general and administrative expenses in check in the quarter, which ended on July 30. SG&A dollars rose a meager 0.6 percent, and SG&A as a percentage of sales fell 75 basis points to 24.8 percent. Gross margin improved by 41 basis points to 40.3 percent--thanks, according to Mansell, to "disciplined inventory management" and the increased penetration of private and exclusive brands.

Net sales for the quarter rose 3.6 percent to $4.2 billion, including a same-store sales increase of 1.9 percent. For the third quarter, Kohl's projected a total sales increase of 4 to 6 percent, with same-store sales expected to gain 2 to 4 percent. Mansell said the launch of the Jennifer Lopez and Marc Anthony apparel brands (which may eventually expand to include home products) would be a highlight of the third quarter.